2014-06-24 – It’s hard not to consider sunk costs.

Huh?

In doing the cost-benefit analysis of starting (or continuing) any venture, we’re told not to consider “sunk costs.” That is, you don’t consider what you spent in the past. You can’t get that back. You have to look at things as if you are starting today. But people say, “Gee, I spent all this money and time. Let’s keep this going.” It’s a natural impulse, but it is wrong. Those are sunk costs and you’re never going to get those back.

Especially if the project is a war. The dead will not rise. Exploded ordinance will not reassemble itself in the armory.

The war in Iraq was a ridiculous venture for the United States in the first place. There was no connection to 9/11. There was no strategic interest of the United States (as opposed to, say, Halliburton). There were no weapons of mass destruction. And there was little prospect that our intervention would transform Iraq into Sweden. But part of the sunk-cost philosophy should say that you don’t rehash the past when making decisions about the future.

What you do is consider what we could invest and what we could gain. Or, just consider what we could gain, which is nothing. There is no more reason to think we could transform Iraq into Sweden today than there was 11 years again when we invaded Iraq the first time. So, really, there’s no reason to go further with this. Even an investment of $1.79 is too much. (That’s not a typo. That’s a dollar seventy-nine, the cost of a bottle of pop at the 7-Eleven.)

Let’s just pretend we never heard of Iraq.